CASE ANALYSIS: ROHTAS INDUSTRIES LTD. & ANR. V. ROHTAS INDUSTRIES STAFF UNION & ORS., (1976)

FACTS OF THE CASE

1. The dispute had its roots in 1948 in the face of internecine competition between two trade unions—the Rohtas Industries Mazdoor Sangh (recognized) and the Rohtas Industries Seva Sangh (unrecognized)—at two related Rohtas Industries factories in the same area.
2. The employees, under the umbrella of Mazdoor Sangh, organized an illegal strike (made illegal under sections 23–24 of the Industrial Disputes Act, 1947). Through a Memorandum of Agreement dated October 2, 1957, the management and all four unions (two registered, two non‑registered) consented to call off the strike and settle their demands through arbitration.
3. Clause 7 of the 1957 agreement referred two questions to a three‑member tribunal under Section 10‑A of the Act:

• The claim of the workers for wages and salaries in the period of the strike; and
• The company’s claim for compensation for losses (loss of profit) sustained due to the strike.

4. The reference was made to Sri J. N. Majumdar and Sri R. C. Mitter—both former High Court judges—and a former member of the Labour Appellate Tribunal of India, whose award (given in 1959) was the foundation of the follow–up writ petitions and appeals.

ISSUES OF THE CASE

1. Whether an arbitral award under Section 10‑A of the Industrial Disputes Act, 1947, is liable to writ jurisdiction of the High Courts under Article 226 for “errors of law apparent on the face of the award.”
2. Whether the arbitral tribunal overstepped its jurisdiction in awarding damages for loss of profits to the employer, when the Act specifies its sole sanction/remedy for unlawful strikes in Section 26, and does not have private damages available.

JUDGMENT

1. The Court held that an arbitral award under Section 10-A of the Industrial Disputes Act, 1947, is subject to High Court review under Article 226 for “errors of law apparent on the face of the award” as such awards gain their authority from statute and are quasi-statutory rulings.
2. The conclusion that the 1948 strike was unlawful (in violation of Sections 23–24) and, as such, that the workers lost wages for the period of the strike was upheld as a proper exercise of the tribunal’s jurisdiction.
3. The award by the tribunal of ₹80,000 (and consequential amounts) to the employer for loss of profits was struck down as a “patent error of law” on the face of the award:

• The arbitrators illegitimately transplanted the English-law tort of conspiracy to support damages against an illegal strike, without considering the strike’s predominant object or whether a remedy under Indian law exists.
• The Industrial Disputes Act has its exclusive remedy (penalty under Section 26) for illegal strikes; there is no statutory or common-law cause of action for compensation that lies outside such a scheme.

4. The Court reasserted that when a statute both enacts a right (penalty for illegal strike) and specifies its remedy (Section 26), no collateral remedy (like arbitration-based damages) can be resorted to “de hors” in the statute.
5. The appeal was rejected, with the High Court’s quashing of the award of compensation intact and no costs awarded, while the forfeiture-of-wages section continues to remain in force.

REASONING

1. Section 10‑A awards take their efficacy from the Industrial Disputes Act and hence are on a quasi‑statutory basis, rendering them subject to written review for errors of law apparent on the face of the award.
2. The Court followed the settled test—if the arbitrator expresses or suggests a proposition of law as the ground for the award, and that proposition is wrong, the award may be set aside. The question to be addressed is confined to the text (or documents incorporated) in the award, not extrinsic evidence.
3. The Industrial Disputes Act is a stand-alone code: any right or remedy it introduces (e.g., penalty for unlawful strike under Section 26) will have to be enforced only under the procedure it lays out. An arbitrator cannot, by consent of the parties, go “de hors” the Act to award private damages for loss of profits.
4. The tribunal’s reasoning—treating an illegal strike as giving rise to a common‑law tort of conspiracy and hence compensation for loss of profit—was found to be a patent legal error, as there is no such remedy under the Act or Indian common law applicable to statutory illegal strikes.
5. Although an award is not required to set out every rationale, where the arbitrator does set out principles of law, those must be accurate; otherwise, the face‑of‑award examination allows correction of any manifest legal error.

References

• Case Law
• Rohtas Industries Ltd. & Anr. v. Rohtas Industries Staff Union & Ors., (1976) 2 SCC 82; 1976 AIR 425 
• Statutes & Constitutional Provisions

• Industrial Disputes Act, 1947: §§ 10‑A, 23, 24, 26
• Constitution of India: Art. 226
• Procedural History
• Patna High Court, Writ Petition No. ____/1959 (quashing loss‑of‑profits portion of the award)

Written by Sunakshi Gla University, Mathura and an intern under Legal Vidhiya.

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